Question 1

As the number of firms in an oligopoly industry decreases, the market moves closer to a _________ market.

Accepted Answer

The answer of As the number of firms in an...

Question 2

A cooperative agreement among oligopolists is less likely to be maintained,

Accepted Answer

A)  the greater the number of oligopolists. 
B)  the larger the number of buyers of the oligopolists' product. 
C)  the smaller the number of buyers of the oligopolists' product. 
D)  the more likely it is that the game among the oligopolists will be played over and over again. 
A)  the greater the number of oligopolists. 
B)  the larger the number of buyers of the oligopolists' product. 
C)  the smaller the number of buyers of the oligopolists' product. 
D)  the more likely it is that the game among the oligopolists will be played over and over again.

Question 3

In some games, the noncooperative equilibrium is bad for the players and bad for society.

Accepted Answer

A) True 
 B)False

Question 4

The equilibrium quantity in markets characterized by oligopoly is

Accepted Answer

A)  higher than in monopoly markets and higher than in perfectly competitive markets. 
B)  higher than in monopoly markets and lower than in perfectly competitive markets. 
C)  lower than in monopoly markets and higher than in perfectly competitive markets. 
D)  lower than in monopoly markets and lower than in perfectly competitive markets. 
A)  higher than in monopoly markets and higher than in perfectly competitive markets. 
B)  higher than in monopoly markets and lower than in perfectly competitive markets. 
C)  lower than in monopoly markets and higher than in perfectly competitive markets. 
D)  lower than in monopoly markets and lower than in perfectly competitive markets.

Question 5

As the number of firms in an oligopoly increases, the

Accepted Answer

A)  price approaches marginal cost, and the quantity approaches the socially efficient level. 
B)  price and quantity approach the monopoly levels. 
C)  price effect exceeds the output effect. 
D)  individual firms' profits increase. 
A)  price approaches marginal cost, and the quantity approaches the socially efficient level. 
B)  price and quantity approach the monopoly levels. 
C)  price effect exceeds the output effect. 
D)  individual firms' profits increase.

Question 6

Table 17-11
Only two firms, ABC and XYZ, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost.
  
-Refer to Table 17-11. If this market were perfectly competitive instead of oligopolistic, what quantity would be produced?

Accepted Answer

A)  25 
B)  35 
C)  50 
D)  70 
A)  25 
B)  35 
C)  50 
D)  70

Question 7

The Sherman Antitrust Act prohibits executives of competing companies from

Accepted Answer

A)  fixing prices, but it does not prohibit them from talking about fixing prices. 
B)  even talking about fixing prices. 
C)  sharing with one another their knowledge of game theory. 
D)  failing to stand by agreements that they had made with one another. 
A)  fixing prices, but it does not prohibit them from talking about fixing prices. 
B)  even talking about fixing prices. 
C)  sharing with one another their knowledge of game theory. 
D)  failing to stand by agreements that they had made with one another.

Question 8

Explain the practice of tying and discuss why it is controversial.

Accepted Answer

Tying is the practice of bundling goods

Question 9

As a group, oligopolists would always be better off if they would act collectively

Accepted Answer

A)  as if they were each seeking to maximize their own individual profits. 
B)  in a manner that would prohibit collusive agreements. 
C)  as a single monopolist. 
D)  as a single perfectly competitive firm. 
A)  as if they were each seeking to maximize their own individual profits. 
B)  in a manner that would prohibit collusive agreements. 
C)  as a single monopolist. 
D)  as a single perfectly competitive firm.

Question 10

Briefly describe the practice of resale price maintenance.

Accepted Answer

Resale price maintenance is a

Question 11

Figure 17-4. Aaron and Ed are roommates. After a big snowstorm, their driveway needs to be shoveled. Each person has to decide whether to take part in shoveling the driveway. At the end of the day, either the driveway will be shoveled (if one or both roommates take part in shoveling), or it will remain unshoveled (if neither roommate shovels). With happiness measured on a scale of 1 (very unhappy) to 10 (very happy), the possible outcomes are as follows:
  
-Refer to Figure 17-4. In pursuing his own self-interest, Aaron will

Accepted Answer

A)  refrain from shoveling whether or not Ed shovels. 
B)  shovel only if Ed shovels. 
C)  shovel only if Ed refrains from shoveling. 
D)  shovel whether or not Ed shovels. 
A)  refrain from shoveling whether or not Ed shovels. 
B)  shovel only if Ed shovels. 
C)  shovel only if Ed refrains from shoveling. 
D)  shovel whether or not Ed shovels.

Question 12

Scenario 17-5
Assume that a local restaurant sells two items, salads and steaks. The restaurant's only two customers on a particular day are Mr. Carnivore and Ms. Leafygreens. Mr. Carnivore is willing to pay $20 for a steak and $7 for a salad. Ms. Leafygreens is willing to pay only $8 for a steak, but is willing to pay $12 for a salad. Assume that the restaurant can provide each of these items at zero marginal cost.
-Refer to Scenario 17-5. How much additional profit can the restaurant earn by switching to the use of a tying strategy to price salads and steaks rather than pricing these goods separately?

Accepted Answer

A)  $20 
B)  $7 
C)  $12 
B)  $6 
A)  $20 
B)  $7 
C)  $12 
B)  $6

Question 13

Which potentially anti-competitive business practice is often justified on the grounds that it corrects for the free rider problem?

Accepted Answer

resale pri

Question 14

Antitrust laws in general are used to

Accepted Answer

A)  prevent oligopolists from acting in ways that make markets less competitive. 
B)  encourage oligopolists to pursue cooperative-interest at the expense of self-interest. 
C)  encourage frivolous lawsuits among competitive firms. 
D)  encourage all firms to cut production levels and cut prices. 
A)  prevent oligopolists from acting in ways that make markets less competitive. 
B)  encourage oligopolists to pursue cooperative-interest at the expense of self-interest. 
C)  encourage frivolous lawsuits among competitive firms. 
D)  encourage all firms to cut production levels and cut prices.

Question 15

Table 17-9
The table shows the demand schedule for a particular product.
  
-Refer to Table 17-9. Suppose the market for this product is served by two firms that have formed a cartel. If the marginal cost of production is $0 and there is no fixed cost, the combined profit of the cartel will be

Accepted Answer

A)  $16 
B)  $24 
C)  $30 
D)  $32 
A)  $16 
B)  $24 
C)  $30 
D)  $32

Question 16

Suppose that Thierry and Abdul are duopolists. Thierry is producing 700 units of output, and Abdul is producing 500 units of output. When Abdul produces 500 units, Thierry maximizes profit by producing 700 units. When Thierry produces 700 units of output, Abdul maximizes profit by producing 500 units. Thierry and Abdul are

Accepted Answer

A)  pricing at the minimum of marginal cost. 
B)  in a competitive market. 
C)  at a Nash equilibrium. 
D)  engaging in mark-up pricing. 
A)  pricing at the minimum of marginal cost. 
B)  in a competitive market. 
C)  at a Nash equilibrium. 
D)  engaging in mark-up pricing.

Question 17

In the case of oligopolistic markets, self-interest makes cooperation difficult and it often leads to an undesirable outcome for the firms that are involved.

Accepted Answer

A) True 
 B)False

Question 18

Table 17-27
Each year the United States considers renewal of Most Favored Nation (MFN) trading status with Farland (a mythical nation). Historically, legislators have made threats of not renewing MFN status because of human rights abuses in Farland. The non-renewal of MFN trading status is likely to involve some retaliatory measures by Farland. The payoff table below shows the potential economic gains associated with a game in which Farland may impose trade sanctions against U.S. firms and the United States may not renew MFN status with Farland. The table contains the dollar value of all trade-flow benefits to the United States and Farland.
  
-Refer to Table 17-27. When this game reaches a Nash equilibrium, the value of trade flow benefits will be

Accepted Answer

A)  United States $35 b and Farland $285 b. 
B)  United States $65 b and Farland $75 b. 
C)  United States $140 b and Farland $5 c. 
D)  United States $130 b and Farland $275 b. 
A)  United States $35 b and Farland $285 b. 
B)  United States $65 b and Farland $75 b. 
C)  United States $140 b and Farland $5 c. 
D)  United States $130 b and Farland $275 b.

Question 19

Figure 17-2. Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.  
-Refer to Figure 17-2. Acme and Pinnacle agree to cooperate so as to maximize total profit. If this game is played repeatedly and Acme uses a tit-for-tat strategy, it will choose a

Accepted Answer

A)  good quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round. 
B)  poor quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round. 
C)  good quality product in all rounds, regardless of the choice made by Pinnacle. 
D)  poor quality product in all rounds, regardless of the choice made by Pinnacle. 
A)  good quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round. 
B)  poor quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round. 
C)  good quality product in all rounds, regardless of the choice made by Pinnacle. 
D)  poor quality product in all rounds, regardless of the choice made by Pinnacle.

Question 20

As the number of firms in an oligopoly market

Accepted Answer

A)  decreases, the price charged by firms likely decreases. 
B)  decreases, the market approaches the competitive market outcome. 
C)  increases, the market approaches the competitive market outcome. 
D)  increases, the market approaches the monopoly outcome. 
A)  decreases, the price charged by firms likely decreases. 
B)  decreases, the market approaches the competitive market outcome. 
C)  increases, the market approaches the competitive market outcome. 
D)  increases, the market approaches the monopoly outcome.

As the number of firms in an oligopoly industry decreases, the market moves closer to a _________ market.

A cooperative agreement among oligopolists is less likely to be maintained,

In some games, the noncooperative equilibrium is bad for the players and bad for society.

The equilibrium quantity in markets characterized by oligopoly is

As the number of firms in an oligopoly increases, the

The Sherman Antitrust Act prohibits executives of competing companies from

Explain the practice of tying and discuss why it is controversial.

As a group, oligopolists would always be better off if they would act collectively

Briefly describe the practice of resale price maintenance.

Which potentially anti-competitive business practice is often justified on the grounds that it corrects for the free rider problem?

Antitrust laws in general are used to

Table 17-9 The table shows the demand schedule for a particular product. -Refer to Table 17-9. Suppose the market for this product is served by two firms that have formed a cartel. If the marginal cost of production is $0 and there is no fixed cost, the combined profit of the cartel will be

In the case of oligopolistic markets, self-interest makes cooperation difficult and it often leads to an undesirable outcome for the firms that are involved.

As the number of firms in an oligopoly market

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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Exam 17: Oligopoly

As the number of firms in an oligopoly industry decreases, the market moves closer to a _________ market.

A cooperative agreement among oligopolists is less likely to be maintained,

In some games, the noncooperative equilibrium is bad for the players and bad for society.

The equilibrium quantity in markets characterized by oligopoly is

As the number of firms in an oligopoly increases, the

The Sherman Antitrust Act prohibits executives of competing companies from

Explain the practice of tying and discuss why it is controversial.

As a group, oligopolists would always be better off if they would act collectively

Briefly describe the practice of resale price maintenance.

Which potentially anti-competitive business practice is often justified on the grounds that it corrects for the free rider problem?

Antitrust laws in general are used to

Table 17-9 The table shows the demand schedule for a particular product. -Refer to Table 17-9. Suppose the market for this product is served by two firms that have formed a cartel. If the marginal cost of production is $0 and there is no fixed cost, the combined profit of the cartel will be

In the case of oligopolistic markets, self-interest makes cooperation difficult and it often leads to an undesirable outcome for the firms that are involved.

As the number of firms in an oligopoly market

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters